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New VAT Calculation?

13

Comments

  • Idiophreak
    Idiophreak Posts: 12,024 Forumite
    10,000 Posts Combo Breaker
    Avoriaz wrote: »

    This example is more real world

    VAT inclusive price is £100

    100 divided by 1.175 = 85.11

    100 minus 85.11 = 14.89

    This is, I think, the most useful point on the subject...it shows that in every(VAT inclusive) pound, there's 15p VAT (at present) - substitute the new tax rate and you get - 100/1.15 = 86.95
    100-87 = 13

    So, of your pound, 13p is now VAT

    So, the difference, is around 2p in every £1

    Have to say, this just seems like madness to me.

    Nobody's going to pass it on. A few retailers will end up with a bit more money, sure, but it won't encourage spending, even if they do pass it on...and it's gonna cost a lot...It's one of those things, a little bit on everything adds up...Just seems a really expensive bit of spin, to me.
  • soolin
    soolin Posts: 74,408 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    7.99 kettle inc 17.5% VAT £6.80 net plus £1.19 VAT

    £6.80 kettle net (assuming the net price stays the same) with 15% VAT £7.82

    Potential saving to customer 17p

    Oh goodness :o, I was trying to do it long hand without a calculator and working back finding the net item cost before VAT, then trying the net item with both 17.5 % VAT and 15% VAT and working out the difference. The calculation ran to a full A4 envelope and I obviously added something instead of tkaing it away.:o

    I'm going to go away now and do something easy like deliver some books!
    I’m a Forum Ambassador and I support the Forum Team on the eBay, Auctions, Car Boot & Jumble Sales, Boost Your Income, Praise, Vents & Warnings, Overseas Holidays & Travel Planning , UK Holidays, Days Out & Entertainments boards. If you need any help on these boards, do let me know.. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.All views are my own and not the official line of MoneySavingExpert.
  • Hintza
    Hintza Posts: 19,420 Forumite
    10,000 Posts Combo Breaker
    hula-hoops wrote: »

    the government should give every adult in the country £40,000.

    When I read this first time round I thought it was nuts, but it does have a certain amount of sense to it. :)
  • StaffsSW
    StaffsSW Posts: 5,788 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Hintza wrote: »
    When I read this first time round I thought it was nuts, but it does have a certain amount of sense to it. :)

    Likewise - I was thinking that there will be a whole section of society that would go out and cover themselves in "bling", buy cars too powerful for them to handle, and drink/dope themselves themselves to an early grave.

    So yes it does have a certain amount of Darwinian appeal to it!
    <--- Nothing to see here - move along --->
  • stevew8975 wrote: »
    Still, there are plenty of people who will fall for the political spin, and believe that captain darling has made our lives wonderful. Omitting the fact that alcohol, tobacco and fuel has all had a duty increase, and a promise to increase national insurance in 2010...

    I think the VAT move has been made for the benefit of businesses rather than the consumer.




    How do you figure that out ? It makes no difference to my business if vat is 1% or 100% I dont get to keep any of it ..........The only '' benefit'' I will see is the time i need to spend making sure i get it right
  • StaffsSW
    StaffsSW Posts: 5,788 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    lesley1960 wrote: »
    [/COLOR]
    How do you figure that out ? It makes no difference to my business if vat is 1% or 100% I dont get to keep any of it ..........The only '' benefit'' I will see is the time i need to spend making sure i get it right


    Most businesses will be keeping their RRP the same as before, therefore they will earn more margin on the same sale... A little more cashflow in the business for you.

    Don't miss the opportunity.
    <--- Nothing to see here - move along --->
  • uganda
    uganda Posts: 370 Forumite
    d.edna wrote: »
    How can 13 pence of £1 be 15%? 13 pence is 13%!

    Yes d.edna 13 pence IS 13% of a pound, but the calculation is not as simple as that. If you had read the rest of the thread properly, you would have seen that.

    Basically, think of VAT added at 17.5% to something that was a tenner. Simple, isn't it? It's £11.75. But now consider something that costs a tenner including VAT and take 17.5% VAT off. Not so simple is it? Post no. 11, which Idiotphreak quoted, is probably the best demonstration of how it works. The answer is £10.00 x £1.175 which works out approximately to be £8.51, which is approximately 15% (NOT 17.5%) of the total.

    If you didn't understand that, then fair enough. If you still don't, fair enough. But even a cursory glance at a few of the other posts would have been enough for you to know we are not talking about a simple calculation. There are plenty of people on here who know more about it than me and whose calculations and explanations will be more accurate and easier to follow. Maybe if you just approached them with a little humility, they would help you.
  • withabix
    withabix Posts: 9,508 Forumite
    The Pound Shop version of the new VAT calculation:

    Price of widget = £1.00 including 17.5% VAT

    Monday....

    Price of widget = £1.00 including 15% VAT

    :rolleyes:

    Hard up people are REALLY gonig to benefit from this aren't they Mr Slug Eyebrows!

    Besides, after the 'January Sales', the prices everywhere will magically be exactly the same with 15% VAT as they were with 17.5% VAT.

    As Paul Daniels used to say: "Now that's Magic!"
    British Ex-pat in British Columbia!
  • StaffsSW
    StaffsSW Posts: 5,788 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    withabix wrote: »
    The Pound Shop version of the new VAT calculation:

    Price of widget = £1.00 including 17.5% VAT

    Monday....

    Price of widget = £1.00 including 15% VAT

    :rolleyes:

    Hard up people are REALLY gonig to benefit from this aren't they Mr Slug Eyebrows!

    Besides, after the 'January Sales', the prices everywhere will magically be exactly the same with 15% VAT as they were with 17.5% VAT.

    Exactly - hence my point that this move has been made to put more money into businesses, not in the consumers pocket.

    I'm not dropping my ebay selling prices by 2.13p in the pound, the business I work for outside of eBay is not dropping it's prices, and from what i understand, there are very very few businesses that have said they will drop their prices.

    But still - the proletariat still believe that the wonderful captain darling is the saviour of the economy with this move, all the time supping more expensive beer, smoking more expensive tabs, and using more expensive fuel to get to the shops to buy them. But still, we've had a VAT cut - so Yeay for Captain darling....
    <--- Nothing to see here - move along --->
  • Idiophreak
    Idiophreak Posts: 12,024 Forumite
    10,000 Posts Combo Breaker
    withabix wrote: »
    The Pound Shop version of the new VAT calculation:

    Price of widget = £1.00 including 17.5% VAT

    Monday....

    Price of widget = £1.00 including 15% VAT

    :rolleyes:

    Don't be so cynical...I've heard they're already drawing up new signs for, as they're now called, 98pLand and 98pStretcher!
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